Praxair to take goodwill charge

Industrial gases company Praxair, Inc., said on 13 June that it would take a US$ 139 million noncash, after-tax charge due to changes in accounting regulations. In a release, the Danbury, Connecticut,…

Industrial gases company Praxair, Inc., said on 13 June that it would take a US$ 139 million noncash, after-tax charge due to changes in accounting regulations. In a release, the Danbury, Connecticut, US-based company said the charge will be recorded as a “cumulative effect of an accounting change, retroactive to 1 January 2002,” in accordance with the new federal accounting regulations known as SFAS 142. The new accounting rules, which went into effect at the start of the year, say firms do not have to write off the goodwill on their books periodically. Instead, they can let it lie on their books until the value of that goodwill drops, or becomes impaired. Companies now have to apply a rigorous test, at least yearly, to check whether the goodwill on their books has dropped in value. Under the old accounting rules, companies would gradually write off the amount of goodwill on their books over time – sometimes as long as 40 years. Praxair said it concluded that “consolidated goodwill in the amount of US$ 144 million and US$ 2 million related to an equity investment (US$ 139 million after-tax) should be written down in accordance with the provisions of the rule.”